The state’s legislative watchdog panel has issued a scathing report about Mississippi Department of Education contracts and purchases that raises questions of cronyism, illegal invoice splitting, and lack of transparency and oversight.

Media reports on MDE contracts prompted lawmakers to ask the Joint Legislative Committee on Performance Evaluation and Expenditure Review to look into the issue. Now, some PEER committee members want further investigation by State Auditor Stacey Pickering.

Some findings of and questions raised by the report released Monday and from information from those close to the probe include:

Why eight contracts totaling about $600,000 for a revamp of MDE’s information technology division were given to former Maryland coworkers of Superintendent Carey Wright or their companies. These contracts have faced some recent media scrutiny.

Why the IT overhaul and other projects were split into small contracts or purchases below the thresholds for state contract board oversight or in some cases competitive bidding or pricing requirements. State law forbids “invoice splitting” of a purchase or project to thwart oversight or bidding.

Why IT contracts or purchases — which would require input and oversight from the state’s technology department — were labeled in the state’s computer system as personal services or consulting.

Whether there were duplications in contracts and spending for the same projects.

Why MDE made payments to Joseph B. Kyles of Memphis of more than $214,000 in fiscal 2015 for computer-related goods and services without a contract and without entering quotes or purchase orders into the state’s accounting system. State records show MDE made at least two purchases just below the “competitive bid limit” of $50,000 with Kyles for what appears to be the same teacher training system.

Kyles is leader of the Rainbow PUSH Coalition’s Memphis branch. He owns a company called The Kyles Company, which filed as an LLC in Tennessee in 2015, but has since been dissolved. Kyles did not return phone calls from The Clarion-Ledger seeking comment.

Sources close to the PEER probe said MDE officials were not forthcoming with answers to numerous questions the committee had.

But PEER member Sen. Terry Burton, R-Newton, said MDE assured the committee that it was taking action to address the issues raised.

“The key point is that the person who was in charge of the procurements in question is no longer there,” Burton said. “The auditor might want to go in and take a look, but I think PEER did a pretty good job on what the issues were, and I think those issues are being addressed, and Dr. Wright and her folks have taken steps to avoid problems like this.”

State Superintendent Carey Wright(Photo: Rogelio V. Solis, AP)

PEER members respond

Some PEER members said they want further scrutiny of the agency's contracts and purchases.

“This does not pass the smell test,” said Rep. Becky Currie, R-Brookhaven, a PEER member. “We’ve asked many questions, and they have not been answered. This needs to be looked at thoroughly by the state auditor. Somebody needs to go in and look at this. PEER has done all we can.”

PEER member Rep. Tim Ladner, R-Poplarville, said he still has many questions about MDE contracts that the agency didn’t answer for PEER.

“It doesn’t look good to the public,” Ladner said. “I’ve still got many questions — yes, invoice splitting, oversight on this coding — that I want more answers to.”

“It wouldn’t bother me at all if the state auditor looked into this,” Jackson said.

PEER member Sen. Tommy Gollott, R-Biloxi, said, “I think there is going to be a thorough investigation into this. We are very concerned.”

Pickering spokesman Logan Reeves said Monday that the PEER report had not been referred to his agency. The report released Monday says, “The Office of the State Auditor should review the findings in this report relative to the personal contracting practices of (MDE) … to determine whether department staff acted contrary to state purchasing rules and regulations ….”

Case study in contracts

PEER released its statutorily required biennial review of state government purchasing practices on Monday. It includes the sampling of MDE contracts as a “case study.” Lawmakers requested the PEER committee and staff look into MDE contracts and spending after media reports.

Of particular concern for the PEER Committee were contracts awarded during the reorganization of MDE’s IT department.

Wright spearheaded the restructuring within a year after her 2013 arrival as head of Mississippi’s public education system.

PEER questioned why the work for the IT overhaul was done through multiple contracts — three of which were under $50,000 and did not require approval from the state Board of Education — instead of a larger one.

“Each of the six contracts procured in fiscal year 2015 was less than the bid threshold but when combined exceeded the threshold at $384,464,” the report states.

The duplicative nature of several IT-related procurements was further questioned.

PEER also noted that MDE coded the contracts as personal services, rather than IT-related work.

Using IT codes would have brought the contracts under the purview of the Mississippi Department of Information Technology Services, which has a lower bid threshold.

ITS law requires a state agency for technology purchases from $5,000 to $50,000 to provide proof of at least two competitive written price quotes. For contracts over $50,000 the agency must submit a competitive procurement request form for ITS to advertise, issue written specifications and receive sealed bids or proposals.

MDE offers little response

In its response, MDE said because more than 7,000 procurement codes exist, staff in procurement might assign different codes to similar contracts.

PEER said it appears MDE lacks policies or procedures to ensure purchases or contracts are coded properly in the state accounting system.

Eight contracts for the overhaul, worth more than $600,000 in total, were awarded to John Q. Porter and Elton Stokes, both of whom are former co-workers of Wright. Porter was paid as a consultant for MDE. In addition, Blue Sky Innovative Solutions LLC, for which Porter served as CEO, also contracted with MDE.

DataOne IT Solutions, a Maryland-based company with ties to Stokes, also contracted with MDE, in addition to him having his own consulting contract.

Porter, who now works with MDE as chief information officer, told The Clarion-Ledger that the agency consulted with the state ITS on the contracts.

“I had conversations with the head of that agency about the work we were doing and gave them our strategic direction,” he said.

But Laura Jackson, director of the state Department of Finance and Administration, wrote in a letter to PEER included in the report that, “MDE had no authority to contract for IT-related acquisitions without ITS’s approval.”

When asked why the contracts for the overhaul were coded for personal services, a MDE spokesperson directed The Clarion-Ledger to the answers the agency provided to PEER. MDE started off the IT overhaul with an initial contract awarded in March 2014 to Blue Sky “to get a sense of what the scope of the issues were at the department,” Porter said.

That contract was initially for $29,050. Contracts under $50,000 are considered small purchases and do not require approval from the state board.

However, a modification a month before the contract was set to end added $69,450 to the amount for a total of $98,500.

The contract was the first of three Porter’s company would receive for a combined amount of $245,500.

“As we continued to do the work, we uncovered multiple things that needed to be done,” Porter said.

At the time, Porter said, MDE was in the process of implementing a new accountability system for the state’s schools. The past system, he said, relied on outside organizations, meaning any time a modification was required, MDE would have to do additional contracting work.

“(It) became a major issue with us trying to build something; that was something no one initially anticipated,” Porter said.